EXCLUSIVE: Cassava Sciences Dealing with US Prison Investigation Linked To Alzheimer’s Drug, Sources Say

WASHINGTON, July 27 (Reuters) – The U.S. Justice Division has opened a prison investigation into Cassava Sciences Inc over whether or not the biotech firm rigged analysis outcomes for its experimental Alzheimer’s drug, two individuals aware of the matter mentioned. the investigation.

The Justice Division workers conducting the Cassava investigation, based mostly in Austin, Texas, concentrate on inspecting whether or not firms or people have misled or defrauded buyers, authorities businesses or customers, in line with the sources, who spoke on situation of anonymity. The sources didn’t present particulars concerning the focus of the investigation and whether or not the division was investigating particular individuals.

As with all Justice Division investigation, this one may result in prison prices or be closed with out prices being filed.

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In an emailed assertion, Kate Watson Moss, an legal professional representing Cassava, neither confirmed nor denied the existence of the Justice Division’s prison investigation.

“To be clear: Cassava Sciences vehemently denies any and all allegations of wrongdoing,” Watson Moss mentioned, including that the corporate “has by no means been charged with a criminal offense, and for good motive: Cassava Sciences has by no means engaged in prison conduct.”

Watson Moss added that Cassava Sciences has acquired confidential requests for data from authorities businesses, however declined to establish these businesses. Watson Moss mentioned that “Cassava Sciences has offered data in response to those requests in full satisfaction of its authorized obligations.” Watson Moss added that no authorities company has accused the corporate of wrongdoing.

A Justice Division spokesman declined to remark.

The corporate was already dealing with scrutiny from the US Securities and Change Fee and from buyers after two docs outdoors Cassava final yr made accusations of information manipulation and misrepresentations associated to analysis underpinning the drug. firm’s Alzheimer’s drug, known as simufilam.

Cassava, a small firm with about two dozen staff, in a press release final yr known as the allegations of information manipulation and misrepresentation “false and deceptive.”

On its web site, Cassava describes simufilam as a “utterly new method” to treating Alzheimer’s, the most typical type of dementia and a progressive mind dysfunction that impacts almost 6 million Individuals. The oral drug restores the conventional type and performance of a key protein within the mind, the corporate mentioned.

A PETITION TO THE FDA

The prison investigation started, sources say, someday after a lawyer on behalf of two docs filed a petition in August 2021 with the US Meals and Drug Administration asking the company to cease the trials. simufilam scientific The docs are David Bredt, a neuroscientist previously with Janssen of Johnson & Johnson, and Geoffrey Pitt, a heart specialist who serves as director of the Cardiovascular Analysis Institute at Weill Cornell Drugs in New York.

The petition filed by Jordan Thomas, a New York-based legal professional representing each docs, says that research revealed by Cassava on scientific trials with simufilam in varied journals contained misrepresented knowledge and pictures of experiments that appeared to have been doctored. a photograph enhancing software program. The FDA denied the request and allowed the trials to proceed.

Bredt and Pitt revealed final November in an article revealed by The Wall Avenue Journal that they shorted shares of Cassava, betting the worth would drop as soon as buyers realized of the alleged manipulation. They later instructed The New Yorker journal that they now not brief Cassava, a declare Reuters couldn’t independently confirm.

The brief sale represents “an enormous battle of curiosity,” Watson Moss mentioned in his assertion to Reuters.

“Cassava Sciences is keen on serving to individuals with Alzheimer’s illness, which isn’t a straightforward payday,” added Watson Moss.

DOWNLOAD OF STOCKS

Cassava shares fell precipitously following Thomas’ FDA petition, presenting a possibility for Bredt and Pitt to revenue from their guess in opposition to the corporate.

Thomas declined to touch upon the matter.

The FDA mentioned in February {that a} so-called citizen petition filed by the 2 docs urging them to launch an investigation of simufilam was not an acceptable avenue for such a request. In the meantime, requests for FDA to provoke enforcement motion are “expressly excluded from the scope of FDA’s citizen submission procedures,” the company mentioned, including that it workout routines its personal discretion in such issues.

An FDA spokesman declined to remark.

Cassava shares rose on Nasdaq from round $7 in January 2021 to greater than $135 in July 2021 on buyers’ hopes that the corporate was on the verge of a breakthrough in treating Alzheimer’s. The inventory plummeted weeks later after information of the petition questioning the outcomes of the Cassava investigation.

Shares of the corporate closed at $21.72 on Tuesday.

Cassava has acquired greater than $20 million from the US Nationwide Institutes of Well being to assist the event of simufilam.

The NIH instructed Reuters that it doesn’t overview potential instances of analysis misconduct associated to grants, however that officers “take analysis misconduct very significantly. Analysis misconduct can distort analysis choices.” NIH funding, the general integrity of the analysis we assist, and public confidence in science and outcomes.”

Cassava additionally faces investigation by the SEC, the sources mentioned. The Wall Avenue Journal final November first reported on the SEC investigation, saying the company was inspecting the claims made within the FDA petition. Reuters was unable to find out what particular claims, if any, drew the company’s scrutiny.

An SEC spokesman mentioned the company “doesn’t touch upon the existence or nonexistence of a potential investigation.”

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Reporting by Marisa Taylor in Washington and Mike Spector in New York; Edited by Will Dunham and Michele Gershberg

Our requirements: the Thomson Reuters Belief Ideas.

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